Trump's intervention

The US economy has been performing relatively well over the last decades; however, General Motors recently announced it would shut two of its Michigan plants, along with others elsewhere. Trump has always been promising American people that he is the man to bring more jobs for American people and these closures will definitely affect his promise. And what is his action? He sends people to talk to the executive of GM and openly expresses his disappointment and wishes. It is clear that Trump wants to use his power and influence to overturn GM's decision; however, does it work?

It will not work. GM's move aims to catch up with other car makers. GM is already behind the new competition in the new era of vehicles. Although Tesla does not produce as many vehicles as GM does, its market value is much higher than GM's value showing investors seeing electric vehicles are the future of vehicles This can be shown that, in many countries, there are more and more electric vehicle chargers and subsidieis for buying electric vehicles. It is sensible for GM to switch to electric vehicles from its previous plan of betting on low oil prices. Currently, low prices are low , but the demand for traditional petrol vehicles is still weak. Under such circumstance, all vehicle companies should invest in electric vehicles and even driverless vehicles.

Trump wants to stop GM from closing those plants and continue to provide jobs; however, this will stop GM from swtiching its current strategic change. Trump can cut taxes or provide subsidies for GM in order to keep GM opening those plants; if GM chooses to go this path, then it is sacrificing long term gains for short term benefits, which is not wise. Of course, Trump may be able topunish GM to force it to keep the plants open; but this is not benefiical for the American economy.

Overall, Trump's intended intervention in GM's plant closure is not a wise move as here is an example that a government tries to intervene when there is no market failure; under such circumstance, the best move is to leave it to the free market.